tax policy

I'm tired of hearing the Robert Gibbs, the Obama team, and my liberal friends claiming we're criticizing Obama's budget but that we don't have any cogent policy solutions of our own. Newt has always been a font of ideas, almost too much so. So I'm starting this thread to ask, if you were President, what policy and budget priorities would YOU be sending to Congress.

Brave fellow and glutton for punishment that I am, I'll go first. It's by no means complete (no housing policy for example), but it's a start.

My message to Congress is in four parts. First, stabilize the economic ecosystem and stop the fear that's spreading now to all sectors of the economy as they assess the impact of the recession combined with radical reforms like health care reform and energy policy.

1. Table the cap-and-trade debate until economic growth returns for at least two straight quarters.
2. Table major health care reform til 2010, but help the uninsured and our emergency rooms through Medicaid and S-Chip, and continue discussion of Community Health Centers as a small-scale solution targeting medical services to the uninsured.

Second, we need to have tax policy that attracts investors back to the markets and allows for capital formation that will drive business creation, expansion, and jobs in the private sector -- and keeps some money in the pockets of individuals so they can spend, save, or pay down debt.

1. Permanent indexing or elimination of alternative minimum tax
2. Leave Bush tax cuts in place til 2012
3. Cut or eliminate the death tax
4. 5-year tax holiday for long-term cap gains
5. 5% reduction for short-term cap gains

Third, the federal bureaucracy needs to manage the budget responsibily. In business, millions of managers are challenged every year to reduce expenses while maintaining output. In bad times, those reductions are steeper, and pay is frozen or cut. Time for government to do the same. Items 6-7 are already in the Obama budget.

1. The President should defer his salary for two years, be an example to those greedy CEOs.
2. Implement a 2-year freeze on Congressional compensation (including staff)
3. 5% across the board reduction in administrative and operating expenses for all federal departments and incent managers to acheive these reduction through bonuses
4. Freeze all discretionary spending, except for unemployment compensation
5. 50% cut to travel and entertainment budgets in the legislative and federal branches
6. Account for supplemental spending estimates (wars in Iraq, Afghanistan) in the budget
7. Means-testing for agriculture subsidies

Fourth, we need an energy policy that protects the environment and improves our security by expanding the role of non-fossil fuels in our energy mix, while keeping costs low.

1. Increase the tax write-off for installation of solar panels from 30 to 65% for residences and businesses
2. Fund and accelerate licensing to build 10 new nuclear power plants in 3-5 years to power the electric grid and hybrid cars
3. Provide new incentives for domestic natural gas production and use it as a transitional energy source 

While I have long thought Barack Obama to be very far left, I was struck by this story, as recounted by the New York Post:

"It's not that I want to punish your success," Obama told him. "I want to make sure that everybody who is behind you, that they've got a chance for success, too.

Then, Obama explained his trickle-up theory of economics.

"My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody. I think when you spread the wealth around, it's good for everybody."

Combine that with Obama's unprecedented breathtaking new welfare proposals dressed up as tax cuts, which eviscerate the 1996 Welfare Reforms by creating cash transfers without work or training requirements.

My suspicious political lizard brain sees a pattern. Barack Obama thinks he has this election in the bag. So after months of running to the center on issues, such as it was, he is starting to talk about an agenda that is closer to his ideological heart. On November 5th, he can claim that he won on redistribution, pointing to this tax plan, these quotes, and some more speeches that he will give in the next three weeks.

And then he will have the political excuse to push it through Congress.

[Promoted - Jon Henke]

Fiscal conservatives have reason to be alarmed leading up to November. The current political climate is such that populist Democrats are poised to make significant gains on Capitol Hill, while Republicans are frantically moving to the center in order to stay in office. This likely means an increase in your tax burden, and a perpetually expanding federal budget (which has nearly doubled since 1980).

It goes without saying that those in favor of pro-growth public policy, with low taxes and sensible government spending, will be furious if a merry band of tax hikers is sworn in to Congress and state legislatures nationwide next year. What is less certain is whether these candidates are aware of America’s preference for policymakers keen on allowing citizens to spend their own money, rather than insisting the government spend it for them.

To that end, the National Taxpayers Union has launched its “I Don’t Vote for Tax Hikers” campaign to mobilize the grassroots movement and present a formal rejection of the tax-and-spend policies that threaten to further inundate government at all levels. The logic behind it is quite simple: Politicians respond to the demands of voters. This campaign is an incredibly important way to remind elected officials that there is a coordinated taxpayer lobby – and we vote, too.

This past week, 15,677 signatures were filed with the North Dakota Secretary of State's office for the Income Tax Cut Inititiave. Sponsored by the North Dakota chapter of Americans for Prosperity, the initiative, if certified for the November ballot, would slash North Dakota's state corporate income tax rates by 15 percent and the individual income tax rates by 50 percent starting in 2009.

Apparently, North Dakota exepcts a budget surplus of anywhere between $700 million to $1 billion next year, so supporters of the initiative are looking for both tax relief and restrained government spending during these "sunny days." Smart!

But the AARP is opposing the measure because "it would hamper state and local governments’ and school boards’ ability to respond to emergencies or shifting priorities in the future." The North Dakota Farm Bureau is also opposing the measure citing "worries that it would place the burden of spending on increased property taxes." Now maybe North Dakota should start a government "rainy day fund" that is concomitant with this tax cut, but it's amazing what poor excuses are made to not cut taxes. (But I invite any North Dakotans to explain why voting Yes on this inititiave would be a bad idea.)

This will be the second income tax related ballot initiative this year, joining the Massachusetts Income Tax Repeal. While well intentioned, the Massachusetts initiative is a bit extreme as it would completely get rid of the 5.3% tax on wages.

With so much focus on the national economy during this presidential election cycle, there has been a lot of emphasis on the candidates' tax and economic growth policies. Folks in the broader national conservative movement need to realize that not only do local and state taxes have just as much of an effect on the economy as national taxes do; state and local tax, budget, government transparency, and other localized bread and butter issues can help build our farm team, as previously discussed.

The fiscal evolution of Barack Obama, in three quotes.

• "There are some things we have to do at home to get our house in order. No. 1 is we shouldn't be running up budget deficits." - Barack Obama - May, 2006
• "Obama says he's not going to sacrifice his domestic priorities for deficit reduction. Universal health care, renewable energy, and all he rest won't be sacrificed on the altar of PAYGO." - Ezra Klein, reporting on Barack Obama's Yearly Kos Presidential Forum - August, 2007
• "Our estimate for the ten-year revenue change compared with current law from Senator Obama’s plan is ... a $2.7 trillion revenue loss. ... With interest costs, Obama would add $3.3 trillion to the national debt..." - TaxVox, the Tax Policy Center Blog (Brookings/Urban), on the fiscal impact of Barack Obama's tax plan - June 2008